5% VAT on the Purchase or Construction of a new residence – New Legislation enactment

Cyprus has approved a new legislation that imposes a 5% VAT rate on the purchase or construction of a building to be used as a main and permanent residence by individuals.
The reduced VAT rate eligibility is subject to two conditions:
- (1) for apartments/houses up to 130 square meters, a 5% VAT rate shall be imposed, while those that exceed 130 m² and are up to 190 m² shall have a VAT rate of 19% on the square meters exceeding the threshold of 130 m², and those that exceed 190 m² shall have a VAT rate of 19% on the whole value; and
- (2) for apartments/houses with a value up to €350,000, a 5% VAT rate shall be imposed, while those that exceed €350,000 and are up to €475,000 shall have a VAT rate of 19% on the amount exceeding the threshold of €350,000, and those that exceed €475,000 shall have a VAT rate of 19% on the whole value.

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